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What Tax Deductions Are There for Relocating a Business?

Here's what you need to know before April 15th when it comes to commercial moves and business relocations.

Commercial moves and business relocations can be expensive. When you are dealing with picking up and moving an entire business, you need to know what is deductible and what is not. Keep reading to learn how you can recoup some of your moving expenses at tax time.

Expenses You Can Deduct for Commercial Moves

It costs money to move business equipment, supplies, and inventory from one location to another. These are all deductible expenses, as are the costs associated with the purchasing or renting of the new location. It is important to keep good records when it comes to business relocations. You must be able to substantiate all the costs associated with a move in order to deduct them on your taxes. Some of the commercial moving expenses you can deduct include:

  • Transportation costs including moving and storage
  • Living arrangement expenses
  • Travel expenses including vehicle rentals, meals, and accommodations
  • Cost of ending your lease
  • Cost of purchasing a new residence

You can also deduct your own personal costs if they are directly related to a commercial move. They have to pass two IRS tests: the distance test and the time test:

Distance Test for Business Relocations

In order to pass the distance test for the IRS, your new primary job location has to be at least 50 miles farther in distance from your former home than your old job location was from your home. If this is the case, you may be able to deduct personal moving expenses on your tax return.

Time Test for a Business Move

To deduct personal moving expenses if you are self-employed, you need to have worked full-time for at least 78 weeks in the first 24 months. This includes 39 weeks in the first 12 months after you relocate to your new area.

When you move a business, it can be costly. You can recoup some of the expenses from your commercial move by deducting certain expenses on your tax return. You can also deduct personal moving expenses related to a business move.

No matter what your situation, it’s a good idea to manage your commercial move or business relocation with the help of an experienced team of professionals. A conversation with a moving company that knows what you're up against can give you wise advice and make the move as smooth as possible.

Connect with our friendly team at Nilson Van today, and make this commercial move a smart one.



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